Economist 8/5/15

  1. ON FRIDAY, the Swiss National Bank (SNB), Switzerland’s central bank, reported second quarter losses of SFr20 billion ($20 billion).so far for 2015 now amount to a whopping SFr50.1 billion, equivalent to 7.5% of Switzerland’s GDP.The SNB’s losses were large but not unexpected.. In January, the SNB abruptly abandoned its currency peg as the European Central Bank geared up for its €1.1 trillion quantitative easing programme. That caused the franc to immediately jump in value by more than 20% against the euro.First, the appreciation of the franc made Swiss exports more expensive for foreigners, prompting the Swiss economy to start shrinking in the first quarter of 2015. Second, the depreciation of the euro against the franc led to significant currency losses on the SNB’s $550 billion foreign-exchange reserves, of which some $230 billion is held in the single currency. This alone accounted for 94% of the central bank’s losses in the first half of the year.
  2. The relaxing of fuel subsidies—which in 2013 cost the government some $7 billion—puts the UAE at the vanguard of a long delayed reckoning in the Gulf. With falling global oil prices, the Arab Gulf states will miss out on an estimated $380 billion in export earnings this year, the International Monetary Fund estimates. Only Kuwait and Qatar will scrape by without a budget deficit, and all the region’s petrol states are being forced to look at cost-cutting.The reforms, announced a week ahead of time, have pushed the price of their petrol to the highest level in the Gulf. In the next-highest, Oman, it is only about half as dear. The UAE’s prices are not completely deregulated; they will be set monthly by a committee based on international prices. But August’s price is only 13 cents below the American retail price.How can the Emirates get away with changes that make other Gulf monarchies shiver? For one thing, much of the burden will fall on expatriates, who make up nearly 90% of the population.Unwilling to cut government spending, Saudi Arabia has already drawn some 244 billion riyals ($65 billion) from its reserves to cover spending in the first six months of the year. The government has also issued its first bonds since 2007. The country spends the equivalent of 8.3% of its GDP on fuel subsidies.
  3. Essentially Expo is a cross between a trade fair and a theme park. But its nature and purpose has mutated over the years. The first Expo, or World Fair, began with London’s Great Exhibition in 1851.The Statue of Liberty was first exhibited at the Universal Exposition of 1878 in Paris and the Eiffel Tower was the symbol of the Paris Expo of 1889. Inventions such as the telephone, the typewriter and the lift were all unveiled at Expos.  Modern-day Expos still provide an opportunity to showcase national cultures and achievements, but their stated goal is to act as a platform for the discussion of global challenges. The Bureau of International Expositions (BIE), set up in 1928 to co-ordinate the events, now counts 168 countries as members, and oversees two main types of Expo. Universal Expos, such as the current one in Milan, last six months and take place every five years. The last one, Shanghai 2010, focused on urbanism and drew a record 73m visitors, most of them from China itself. International Expos are smaller, can occur more frequently, last up to three months and have more specific themes.
  4. Delta Air Lines, the American carrier with the largest footprint in Africa, confirmed on Monday that it is banning all lion, leopard, elephant, rhinoceros and buffalo trophies from its cargo holds. Its decision was, effectively, a capitulation to an online petition that has amassed nearly 400,000 signatures (and which was launched months before Cecil’s death). Two other US carriers—United Airlines and American Airlines—quickly followed suit.American embargos are important because its citizens make up by far the largest contingent of hunters. But their acquiescence is just part of a larger movement in the airline industry.According to campaign websites, the following carriers have banned hunting trophies over recent months: Air Canada, Air France, British Airways, Brussels Airlines, Emirates Airline, Etihad Airways, Iberia, KLM, Lufthansa, Qantas, Qatar Airways, Singapore Airlines and Virgin Atlantic Airways. One notable, bitter exception is South African Airways (SAA), the flag-carrier of the African country with the briskest trade in lion hunting.
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